Fundamentals
Transfer Pricing Risk Assessment
A transfer pricing risk assessment is a systematic review of a group's intercompany transactions to identify areas most exposed to challenge by tax authorities. It evaluates factors such as transaction value, jurisdictional risk, documentation quality and historical audit activity to prioritise where compliance effort should.
Risk assessments typically start by mapping all material intercompany transactions across the group, including goods, services, intangibles and financing, then scoring each against criteria such as materiality, complexity, and whether comparable data is readily available. Transactions involving unique intangibles or loss-making.
Once risk areas are identified, businesses can prioritise resources towards strengthening documentation, refreshing benchmarking studies, or restructuring arrangements where appropriate. Regular risk assessment also helps groups respond more effectively to tax authority risk-rating exercises, which increasingly determine which.
In practice
What matters when applying transfer pricing risk assessment
- Maps and scores intercompany transactions by risk level
- Considers materiality, complexity and data availability
- Flags high-risk areas like intangibles and loss-makers
- Directs compliance resources to the highest-priority risks
- Supports response to tax authority risk-rating exercises
Frequently asked
Common questions
How often should a risk assessment be carried out?+
Most groups benefit from conducting a transfer pricing risk assessment annually, alongside more immediate reviews following major business changes such as acquisitions, restructurings or entry into new markets, ensuring the assessment stays aligned with the group's current risk profile.
What increases transfer pricing risk for a group?+
Common risk drivers include transactions involving unique or hard-to-value intangibles, persistent losses in one entity while related parties remain profitable, inconsistent documentation across jurisdictions, and significant restructurings that shift functions, assets or risks between group entities.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.